Johnson Controls to Spin Off Auto Interiors Unit

Johnson Controls, the industrial conglomerate based in Milwaukee, said on Sunday that it would spin off its automotive interiors business into a new joint venture with a Chinese partner.

Working with Yanfeng Automotive Trim Systems, a subsidiary of the Shanghai Automotive Industry Corporation, Johnson will contribute assets to create what it said would be the largest auto interiors company in the world.

Annual revenue for the joint venture – which will make instrument panels, cockpit systems, door panels and floor consoles – is expected to be $7.5 billion.

Johnson Controls will have a 30 percent stake in the new company, with Yangfeng holding 70 percent.

The unconventional move comes as Johnson Controls continues to shed noncore assets. Earlier this year, it sold its auto electronics business to Visteon for $265 million, seeking to reduce its reliance on the cyclical car market.

Johnson Controls is still the world’s largest maker of car seats, however. It also makes products from air-conditioning equipment to batteries, and had more than $42 billion in revenue last year.

“Joining our two interiors businesses is a natural extension of our already very successful existing partnership with Yanfeng in automotive seating, which has flourished over the past 15 years,” Alex A. Molinaroli, the chief executive of Johnson Controls, said in a statement. “It creates a strong combined company with a market leading position and a foundation for sustained global growth.”

The new company will have its headquarters in Shanghai, and will maintain engineering and customer service operations in the United States, Europe, China, Japan and India.

“This also aligns with Johnson Controls’ corporate commitment to China, which is increasingly becoming a major center for the global automotive industry,” Mr. Molinaroli said.

The companies said the noncash deal was expected to close in the first half of next year.

Shares in Johnson Controls are down 12 percent this year, but remain up nearly 20 percent from where they were at this time a year ago.